Archive for February, 2012

Jeremy Grantham: 10 Lessons

Nice list from Jeremy Grantham, via Marketwatch:

1. Believe in history
“All bubbles break; all investment frenzies pass. The market is gloriously inefficient and wanders far from fair price, but eventually, after breaking your heart and your patience … it will go back to fair value. Your task is to survive until that happens.”

2. ‘Neither a lender nor a borrower be’
“Leverage reduces the investor’s critical asset: patience. It encourages financial aggressiveness, recklessness and greed.”

3. Don’t put all of your treasure in one boat
“The more investments you have and the more different they are, the more likely you are to survive those critical periods when your big bets move against you.”

4. Be patient and focus on the long term
“Wait for the good cards this will be your margin of safety.”

5. Recognize your advantages over the professionals
“The individual is far better positioned to wait patiently for the right pitch while paying no regard to what others are doing.”

6. Try to contain natural optimism
“Optimism is a lousy investment strategy”

7. On rare occasions, try hard to be brave
“If the numbers tell you it’s a real outlier of a mispriced market, grit your teeth and go for it.”

8. Resist the crowd; cherish numbers only
“Ignore especially the short-term news. The ebb and flow of economic and political news is irrelevant. Do your own simple measurements of value or find a reliable source.”

9. In the end it’s quite simple. really
“[GMO] estimates are not about nuances or Ph.D.s. They are about ignoring the crowd, working out simple ratios and being patient.”

10. ‘This above all: To thine own self be true’
“It is utterly imperative that you know your limitations as well as your strengths and weaknesses. You must know your pain and patience thresholds accurately and not play over your head. If you cannot resist temptation, you absolutely must not manage your own money.”

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Source:
10 investment lessons from Jeremy Grantham
Jonathan Burton
MarketWatch, Feb. 26, 2012
http://www.marketwatch.com/story/10-investment-lessons-from-jeremy-grantham-2012-02-26

Category: Apprenticed Investor, Investing, Psychology, Rules

How Many Companies Have Been “The Largest”?

Apple is the 11th company to become the largest by market capitalization: > click for larger graphic > Source: Confronting a Law Of Limits JAMES B. STEWART Published: February 24, 2012 http://www.nytimes.com/2012/02/25/business/apple-confronts-the-law-of-large-numbers-common-sense.html

Category: Digital Media, Mathematics, Valuation

Economic Week in Preview

(Careful, this one is LOUD)

For more info, go to FusionIQ Investor

Category: Economy, Video

Little Darlings: How Boring Are Bankers?

On a late February Friday, I saw this tweet from Andrew Ross Sorkin about a book his wife—a literary agent—had worked on that he tagged with the high-concept pitch of Too Big to Fail meets Devil Wears Prada. The premise seemed too good to ignore. Following Sorkin’s link, I discovered The Darlings by Cristina Alger,…Read More

Category: Books

Skyscraper Index Building Bubble

Index+ +Bubble+Building+100112+(2) 1.14300620

Category: Humor, Psychology, Think Tank

Lost Decade And Counting . . .

The net impact of the financial crisis has been a lost decade — not just for the US, but for much of Europe as well: > > Source: Rolling back the years The Economist online Feb 23rd 2012, 14:35  http://www.economist.com/blogs/graphicdetail/2012/02/daily-chart-15

Category: Bailouts, Digital Media, Economy, Really, really bad calls

Ex-Lobbyist Jack Abramoff on Wash DC Corruption

Ex-Lobbyist Jack Abramoff: Here’s How to Clean Up Washington Corruption

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Money and Elections Do Mix, Except When Bribery Is Involved

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Category: Legal, Politics, Video

10 Monday AM Reads

Well, I am back at my desk and no worse for the wear and tear. These are what I started my work week with: • The Housing Recovery In One Index (Pragmatic Capitalism) • What actually happens at Davos? (New Yorker) • Krugman: What Ails Europe?  (NYT) • Berkshire Selects Manager to Eventually Replace Buffett…Read More

Category: Financial Press

G20/ECB/Ben/China

What we got out of the G20 meeting over the weekend was very little as expected. The Germans don’t want to expand the size of the ESM (by possibly combining it with the remaining EFSF) and the IMF won’t get more help from its non Euro members to help Europe until the Germans do. Front…Read More

Category: MacroNotes

Do Rising Rents Complicate Inflation Assessment?

Do Rising Rents Complicate Inflation Assessment? Brent Meyer 02.23.12 ~~~ In the face of falling house prices, decreasing rates of homeownership, and a glut of vacant homes, the Consumer Price Index’s measure of the cost of owner-occupied housing—owners’ equivalent rent of residences (OER)—has begun to accelerate, rising at an annualized rate of 2.3 percent over…Read More

Category: Federal Reserve, Inflation, Real Estate, Think Tank